As votes come in, Carly Fiorina awaits her fate

Hewlett-Packard's CEO will likely be forced to step down if she loses her bid to merge the company with Compaq

BLOOMBERG , CUPERTINO, CALIFORNIA

Hewlett-Packard Co Chief Executive Officer Carly Fiorina has spent six months campaigning for the computer maker's US$20.8 billion purchase of Compaq Computer Corp, and investors say a loss in yesterday's shareholder vote may lead to her resignation.

"She cannot stay in the job if she loses," said L. Roy Papp, whose L. Roy Papp & Associates owns 800,000 shares among its US$900 million in assets and supports the purchase. "If she wins this, she's a heroine."

Dissident director Walter Hewlett is waging a proxy fight to block the deal, saying it threatens the computer maker's profit.

The son of co-founder William Hewlett portrays Fiorina as a misguided leader who has bungled forecasts, shifted strategy and failed to prove she can integrate the computer makers. He wants to replace her with someone who doesn't need to "learn on the job."

The personal nature of the battle has made the vote as much about Fiorina as it is about the purchase, and she can't afford to lose, investors say. While the final tally may take weeks, yesterday's meeting in Cupertino, California, probably marks the biggest event of her career.

"She's clearly made a holy war out of this merger," said Bruce Garelick, whose Loomis Sayles & Co owns the stock and will vote against the deal. "She would consider it a personal defeat if it didn't go through."

Fiorina has refused to comment on whether she'll resign and won't say if she wants Walter Hewlett to leave the Palo Alto, California-based company's board if the purchase is approved.

Fiorina's predecessor, Lewis Platt, opposes the deal and has lobbied some analysts against it. Hewlett-Packard board members, except Walter Hewlett, have said they support her.

"She has made this vote a referendum on herself," Walter Hewlett said on a conference call last week. "I don't think she will have the credibility to lead the company" if the transaction is voted down, he said.

Hewlett-Packard, founded in a Palo Alto, California, garage in 1939, has grown into the world's second-largest computer seller behind International Business Machines Corp. Fiorina was brought aboard in July 1999 to jump-start the company as it fell behind rivals in server computers and Internet services.

The stock has dropped 26 percent since Fiorina, 47, started. The former Lucent Technologies Inc executive last year decided that buying Houston-based Compaq was the best way to plug the holes in the computer maker's lineup.

"Hewlett-Packard has never accepted being less than the best we can be, and we're not about to start now," she said March 6 at a speech in Palm Springs, California.

Walter Hewlett has said buying Compaq wouldn't do enough to build up the areas Fiorina is targeting and would instead make the company too dependent on low-end PCs. Since he announced his opposition in November, he's met with more than 100 investors. He and the other founding family members control 18 percent of the shares.

The bickering among executives and the personal attention mean investors have been given more information than is typical in big transactions, analysts say. Even as Institutional Shareholder Services sided with Fiorina, the world's largest proxy adviser lauded Hewlett for forcing the company to release such detailed plans.

"He has really put management's feet to the fire," said Doug Altabef, managing director at Matrix Asset Advisors, which owns the stock in its US$800 million portfolio and opposes the purchase.